Suncity Group plunges 48% on CEO’s arrest

World’s biggest junket operator sees biggest plunge in share price since 2008.

Suncity Group's shares have dived following the arrest of its CEO Alvin Chau [FILE: Bloomberg]

Suncity Group Holdings Ltd. plunged by the most since 2008 as the stock resumed trading in Hong Kong following the news of Chief Executive Officer Alvin Chau’s arrest.

The slump of as much as 48% in the listed arm of the world’s biggest junket operator came as it said it expects business to be adversely affected if it loses financial support from the CEO. Shares of other Macau casino operators were mixed after suffering heavy losses on Monday.

Chau, who was detained on Nov. 26, intends to resign as chairman and executive director, Suncity said in a regulatory filing. Macau’s judiciary police said Sunday that he confessed to establishing overseas gambling platforms and carrying out illegal virtual betting activities. Junkets service high-rollers and extend credit to them.

“We are heading for a junket-free scenario for Macau casinos,” said Angela Hanlee, an analyst with Bloomberg Intelligence. Macau gaming companies may experience a severe shrinkage of VIP gaming business as authorities tighten supervision over junkets in mainland China, she wrote earlier in a Nov. 26 note.

Suncity said that none of its subsidiaries or staff is under investigation in connection with Chau’s arrest.

While the firm said it is dependent on the financial support from Chau and his related companies, the board doesn’t expect the incident having a material adverse impact on the Suncity’s daily operations, according to the filing. Suncity’s listed arm doesn’t include its junket operation.

Source: Bloomberg